NZ First leader Winston Peters. Photo by Hagen Hopkins/Getty Images

Winston Peters’ $300,000 fealty clause is an affront to our democracy

A requirement that NZ First MPs cough up almost a third of a million dollars if if they are expelled or resign from caucus but stay in parliament is draconian and chilling, argues National MP Nick Smith 

The revelation that Winston Peters has binding contracts over his MPs requiring them to personally pay $300,000 in the event of a falling-out is an affront to our democracy.

I found out about the provisions from a disgruntled NZ First party insider. I initially did not believe that Peters was that oppressive. The rule 57h is not on the NZ First website. I got the documentary evidence from the Electoral Commission.

The NZ First leader did all he could to prevent me from raising the issue in parliament. Amazingly most of his MPs said they were unaware of the contract. Eventually, Winston fessed up that all nine had signed.

These types of contracts are illegal in any other workplace. It is called indentured labour. People may get a redundancy pay out or exit package if there is a breakdown in relationships. The idea that someone would have to pay in such circumstances the sum of $300,000 is abhorrent. The unions and Labour Party would normally be up in arms but are silent given that Peters put them into power.

Parliament is no average workplace. It is where our laws are made and where decisions are made on billions of dollars of public money. The constitutions of most developed countries state that MPs must be representative of the whole people and not be bound by any orders, instructions or contracts and act in good conscience in the public interest.

The constitutional rules are there for good reason. There were times when MPs, mayors and councillors were controlled by land barons and rich paymasters. A modern democracy requires that elected officials are not bound by some backroom contract or personal financial interest but do what they believe is genuinely right.

There are some legal experts like Otago University’s Professor Andrew Geddis who believe these NZ First contracts are illegal and are unlikely to be held up in court. This further highlights how obnoxious they are but offers little comfort. The public damage from these contracts is not extracting the $300,000 from the MP who has fallen out with Winston Peters, but in the intimidation it allows over every one of these MPs every day. It also means any MP defying Peters has to be prepared for a long, ugly expensive court battle to avoid financial ruin.

Peters justifies the $300,000 penalty contracts on the basis that parties should get their money back when an MP falls out with their party. This contradicts the fact that Peters left National and Shane Jones left Labour and neither paid a penny. Nor should they. MPs are not party property. Peters had it right at the time when he stated “MPs must be free to follow their conscience. They were elected to represent their constituents not to swear an oath of blind allegiance to a political party.”

This controversy over these contracts is part of the broader debate over Winston Peters’ “Waka hopping” Bill. He wants the statutory backing to be able to fire MPs. This law change has been universally condemned by more than 20 legal academics, the Human Rights Commission, the Clerk of the House of Representatives, former speakers and many former MPs. In most jurisdictions, this law change would be unconstitutional, including the home of MMP, Germany. Courts in PNG and Europe have thrown out similar proposals.

We are to join only a few authoritarian states like Pakistan, Zimbabwe and Sierra Leone who give the power to party leaders to dismiss MPs. The tragedy of this electoral law change is that the Green Party are voting for it despite their current co-leader Marama Davidson saying it is “undemocratic” and “a threat to democracy”. Former Green leader Rod Donald described a near identical bill as “the most draconian, obnoxious, anti-democratic, insulting piece of legislation ever inflicted on parliament”. My hope is that the Greens may reconsider before they do irreparable damage to their brand.

This issue is much more damaging for the Greens than NZ First. People have long known Winston Peters has little respect for democratic norms and will not be surprised he has imposed authoritarian contracts over his MPs. The surprise is that the Greens are tolerating such behaviour and are supporting making it the law for all parties and a permanent part of our democratic system.


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